In dry climate zones, headwater streams are often regulated for water extraction causing intermittency in perennial streams and prolonged drying in intermittent streams. Regulation thereby reduces aquatic habitat downstream of weirs that also form barriers to migration by stream fauna. Environmental flow releases may restore streamflow in rivers, but are rarely applied to headwaters. We sampled fish and crayfish in four regulated headwater streams before and after the release of summer-autumn environmental flows, and in four nearby unregulated streams, to determine whether their abundances increased in response to flow releases. Historical data of fish and crayfish occurrence spanning a 30 year period was compared with contemporary data (electrofishing surveys, Victoria Range, Australia; summer 2008 to summer 2010) to assess the longer–term effects of regulation and drought. Although fish were recorded in regulated streams before 1996, they were not recorded in the present study upstream or downstream of weirs despite recent flow releases. Crayfish (Geocharax sp. nov. 1) remained in the regulated streams throughout the study, but did not become more abundant in response to flow releases. In contrast, native fish (Gadopsis marmoratus, Galaxias oliros, Galaxias maculatus) and crayfish remained present in unregulated streams, despite prolonged drought conditions during 2006–2010, and the assemblages of each of these streams remained essentially unchanged over the 30 year period. Flow release volumes may have been too small or have operated for an insufficient time to allow fish to recolonise regulated streams. Barriers to dispersal may also be preventing recolonisation. Indefinite continuation of annual flow releases, that prevent the unnatural cessation of flow caused by weirs, may eventually facilitate upstream movement of fish and crayfish in regulated channels; but other human–made dispersal barriers downstream need to be identified and ameliorated, to allow native fish to fulfil their life cycles in these headwater streams.